The BoC’s Business Outlook Survey was overall soft, particularly in businesses’ expectations for capital spending (down to 4% from 8%) and hiring intentions (down to 20% from 31% prior). Inflation expectations, however, were slightly firmer after a big drop in the last report-some 29% now look for inflation of greater than 2.0% (24% prior), although that still leaves expectations concentrated in the bottom half of the Bank’s target range.Beyond those key metrics, the commentary in the report also emphasized those trends in pointing out that “lower oil prices continue to dampen the overall sales outlook of firms, weighing on investment and hiring intentions…” and while there are some signs that many businesses are benefiting from the strong US outlook /lower CAD, those businesses do not expect a material increase in sales growth over the next 12 months. That is to say, the benefit will take quite some time to appear. Overall, this report appears to on the soft side of what the BoC was hoping for.
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